Fast-growing life insurer Partners Life has completed a $31.6m capital raising to fund its next phase of growth.

The move comes as a precursor to listing on the NZX within the next two years.

It now has policies bringing in more than $100 million of annual premiums, though it remains a relatively small market player despite writing new business at a rate beaten only by life insurance giant Sovereign.

At the end of March, industry statistics show there were just short of $2 billion of annual premiums in place for both individual and group life insurance policies.

"It's just over three years since we opened for business and, in a market dominated by well-resourced and long-established foreign-owned life companies, we have created a very substantial and competitive New Zealand company," said Partners Life managing director Naomi Ballantyne.

There was room for continued growth as New Zealanders were under-insured, said Ballantyne who was involved in the early days of Sovereign, and launched the company that became ANZ Life.

The capital raising, which exceeded the $20m targeted, is to support growth and boost Partners' solvency, and was largely raised from existing professional and sophisticated investors.

Partners Life aims to float on the NZX, but Ballantyne said: "It won't be any time sooner than 12 months away. It could be 12 months or so following that."

There was ongoing consultation by the Reserve Bank on regulating life insurers, which was resulting in uncertainty that was not conducive to listing before then.

But she said: "We are just starting up the process of getting ourselves ready for the IPO."

The life insurer is currently privately owned by a spread of investors.

Growth is costly as insurance advisers are paid large upfront commissions, so large that they are believed by some to be driving "churn" where advisers shift clients periodically from one insurer to another to earn new commissions. These are often more than 100 per cent of the first year's premium and result in premiums being driven up.

Partners Life's financial statements to the end of March show it has paid $112 million over the past two years in upfront "acquisition" commission to advisers. That's a similar rate to the $62m paid by the biggest insurer, Sovereign, in the year ending June 2013.

The FMA is looking at churn, after a failed industry attempt to curtail it by cutting commissions.

Some believe no upfront commissions should be paid on transfer business, but Ballantyne said the regulator should focus on creating a comprehensive process advisers should follow when transferring business to ensure that switches happen in the clients' best interests rather than being driven for commissions, which she defended stoutly.

Commission was appropriate because advisers could go a long time between sales.

"They have got to kiss a lot of frogs to find a prince," she said.

Partners has been lobbying to persuade the Government to consider insurance as an equally important priority for workers as KiwiSaver.

"It's compulsory for employers to make sure employees are aware of KiwiSaver, why not about the need to protect their income should they get sick?" she said.

While ideas like that have failed as yet to result in new policy, the response is warming up. Ballantyne said in the early days of lobbying bureaucrats at the Ministry for Business, Employment and Innovation and the Reserve Bank did not appreciate how different life insurers were from general insurers.

"They are definitely getting there now, and we have played a significant role in that because we had to make sure they didn't make any decisions that would destroy our business," she said.